Expect a 30-50% Reduction of Commissions - from BCBS of SC

[669comche]

I can't talk for California since I do not do business there.

Most of the carriers that I use in TX advance between 7-12 months.

Then lets take a 50% decrease. Its still doable.

$400 x 12 x 10% = $480

At $160 to obtain a client profit is still $320. Again, still doable.

Why don't you get the monthly commission from month 10?

By the way, I just ran a client on BCBSTX - For s September effective date premium was $194 - For October 1st effective date $249.

So bear in mind my original calculation did not take account of the rate increases that will happen.

The companies will start advancing again........they would be foolish not too.

 

[GreenSky]

A 30% - 50% cut in commissions I think is rather positive.

If you are on 20% right now your commissions would go down to 14% - thats still doable.

The kicker is going to be the advance period.

$400 x 9 month advance x 20% = $720

$400 x 12 month advance x 14% = $672

And this assumes no increase in the rate.

Thats only a $48 decrease in commission.

Let me do the math correctly because the advance is not the important part, it's the annual commission.

20% x $4,800 premium = $960
14% x $4,800 premium = $672
Difference $288

To earn a $960 commission. the premium needs to increase by 43% so that you'll be in the same position after the first year.

Sounds great but how many clients will you lose because they now can't afford a monthly premium that goes $400 to $572?

Your example of the premium increase for BX is only 28%. And what makes you think companies will start to advance again? Retention has to drop because of high premiums so it will be chargeback city.

Blinders only work on race horses and rose colored glasses will give you a headache.

Rick

 

[Crabcake Johnny]

Most of my local broker friends in MD only sell Carefirst - these are the "old dog" agents I met at local insurance events.

Almost all have modest office space and at least one administrator. They sell individual plans but also cross sell other products.

Carefirst pays around $20/mo regardless of the premium. A first year agent can expect to earn around $40K just selling individual health and an additional 20K cross selling.

That's 60K gross 1st year and after expenses - not that much. It only get lucrative after a few years in business, which - as it's been pointed out to me - is "the way it's always worked."

The only thing we're seeing the death of is "SIX FIGURES FIRST YEAR BY 12 MONTHS 20% ADVANCES."

I should host a webinar run by some of these old dogs so they can tell you what they think that recent model has done to our industry.

 

[669comche]

I disagree on the fact that you think the advance is unimportant.

Most agents fund their business on advances.

That is what drives their business. Granted, for those of us that have been in the biz a while total compensation is probably more important. However many agents looking at this forum are think how are we going to pay for leads etc etc without the advance.

I don't think that individuals wills top buying health insurance. Its just going to cost them more. Gas, food, housing, clothes have all become more expensive. Whats happens? There is an initial kaffuffle but people still stump up the money to pay for these items.

Why would insurance be any different?

Are you going to cancel your health insurance because its going to be more expensive? I know I am not. I cannot. I have a family and need health insurance. Yes, I am going to bitch and whine about it increasing, but guess what? I am still going to pay for it.

And that is whats probably more likely to happen. Yes, there will be some that go without it. Thats no biggie. They are the same people that want 100% coverage, with a zero deductible, and zero premium........my business won't suffer from losing those shoppers.

Why wouldn't they advance??? These are multi billion dollar organizations: They are still hungry for premium dollars - they are going to find a way to generate revenue.

Rose colored glasses????

Whats the alternative be miserable and think that we are all doomed?

Sorry, I don't think like that.

 

[GreenSky]

One of the worst things that happened was when companies and marketers started offering advances. Selling insurance is not supposed to be easy - this business is difficult.

Now we have too many agents competeting for the same number of policies because they can make $1,000 at a time. Many of them are living advance to advance and when they received a couple of cancellations wind up owing damn near as much as they earn in any one month.

I know an agent in CA that used to sell Aetna pretty much only because of the advances. He wrote a ton of business but never could get ahead. Now he's looking for a job and is stiffing me on a $450 chargeback I had to pay for him on another product.

I could live with 10-15% commission if there were no longer advances available. Get rid of the 50% of agents because of this and there will be more prospects for the rest of us.

The same could be said about the MA industry. Paying all the commission upfront invites cheats and bad agents. I'd be happy receiving $50 a month on every policy I write.

That being said, ObamaCare sucks and will ultimately screw us all.

Rick

 

[669comche]

The companies have to offer advances to "sell" themselves to agents/brokers in order to get them to move their product.

Personally I have never had an issue with chargebacks on personal production. When I had agents under me that was a completely different scenario...and one that I am gladly out of now.

Advances are what I originally built my agency on. It was a much better deal than going to the local bank for a loan.

 

[Crabcake Johnny]

I disagree on the fact that you think the advance is unimportant.

Most agents fund their business on advances.

That is what drives their business. Granted, for those of us that have been in the biz a while total compensation is probably more important. However many agents looking at this forum are think how are we going to pay for leads etc etc without the advance.

I don't think that individuals wills top buying health insurance. Its just going to cost them more. Gas, food, housing, clothes have all become more expensive. Whats happens? There is an initial kaffuffle but people still stump up the money to pay for these items.

Why would insurance be any different?

Are you going to cancel your health insurance because its going to be more expensive? I know I am not. I cannot. I have a family and need health insurance. Yes, I am going to bitch and whine about it increasing, but guess what? I am still going to pay for it.

And that is whats probably more likely to happen. Yes, there will be some that go without it. Thats no biggie. They are the same people that want 100% coverage, with a zero deductible, and zero premium........my business won't suffer from losing those shoppers.

Why wouldn't they advance??? These are multi billion dollar organizations: They are still hungry for premium dollars - they are going to find a way to generate revenue.

Rose colored glasses????

Whats the alternative be miserable and think that we are all doomed?

Sorry, I don't think like that.

I agree that the advance is important. Many ethical agents needed the advance to get into this business and a lack of advances will keep a lot of good agents out.

Without advances you need around 6 months of household bills in the bank - liquid - on top of marketing money. Either that or a working spouse capable of paying the bills.

The end result however, if agents coming into the business are going to be more stable, have more of a desire to sell health insurance and less of a desire to sell "whatever advances the most."

 

[Full Throttle]

The companies have to offer advances to "sell" themselves to agents/brokers in order to get them to move their product.

Personally I have never had an issue with chargebacks on personal production. When I had agents under me that was a completely different scenario...and one that I am gladly out of now.

Advances are what I originally built my agency on. It was a much better deal than going to the local bank for a loan.

In my state, none of the carriers advance except for Assurant, and they have a very small market share. The top dog in IFP health in my state is BC/BS (something like 80% of premium in the state). Their commission structure:

Individual Only Plan = a flat $15.50 per month or $186 FYC
*(renewals $10 per month or $120 per year)
Family Plan (2 or more) = a flat $30 per month or $360 FYC
*(renewals $20 per month or $240 per year)
Small Group Health = $19 per employee per month (regardless of carrier or plan)

To make matters worse, you have to contract through a GA and they typically take a 15% to 30% off that business as well. How do you become a GA? Consistently writing a minimum of $50,000 in commission each year with BC/BS before they will even look at you.

The other carriers have similar commission structures, the only difference, you can go direct to the carrier instead of through a GA (for individual business, group business requires production to go direct with the other carriers). As bad as that sounds, people still make money here and there are all sorts of large, stable health insurance agencies located here. Like John mentioned, it becomes a marathon, no a sprint.

The nice part, as bad as it sucked getting out of the gate, it's nice having a stable block of renewals coming in each month and knowing I don't need any sort of marketing budget to go create business, since I learned to do without one from the beginning.

 

[TXINSURANCE]

I can't talk for California since I do not do business there.

Most of the carriers that I use in TX advance between 7-12 months.

Then lets take a 50% decrease. Its still doable.

$400 x 12 x 10% = $480

At $160 to obtain a client profit is still $320. Again, still doable.

Why don't you get the monthly commission from month 10?

By the way, I just ran a client on BCBSTX - For s September effective date premium was $194 - For October 1st effective date $249.

So bear in mind my original calculation did not take account of the rate increases that will happen.

The companies will start advancing again........they would be foolish not too.

The price difference is because you were quoting their "saver"'plan which until now didn't have first dollar benefits for preventative. The biggest price jumps are on plans that were more limited and now are being forced to be more benefit rich.

Although HHS will tell you otherwise...

 

[669comche]

No am I am not.

I am quoting their Select Choice plan.